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“Well, every traffic official who came to tell the truth under oath, the Interbefore us in that capacity-and we pros- state Commerce Commission would not ecuted it for three days at Chicago-testi- have stopped the payment of rebates. I fied that rates were absolutely maintained. have been able to discover no way in
“Senator Newland—How many did which to make them tell the truth.” you have before you ?'
“Mr. Prouty- We had the officials The attainment of publicity, you see, of every trunk-line leading from Chicago is a very difficult matter so long as the to New York.'
railroads are in the hands of private “They all testified the rates were ab- owners whose interests are opposed to solutely maintained from Chicago to publicity. It is true that Governor La New York. Two years after that I ex- Follette succeeded in turning the light on amined the chief traffic officer of the Bal- the rebate business in his state by sending timore and Ohio, and of the New York public inspectors to examine the books of Central—do not think it was the same the companies in order to test the accuman in either case—and of the other racy of their returns under the tax laws. lines, and they all testified that rates had But the railroads were not expecting the never been maintained. I would like X-rays. They were unprepared. They to know what I could do as Interstate do not need to leave any traces of their Commerce Commissioner to make those discriminations and if any plan of public gentlemen' admit that they paid rebates, inspection were adopted they would not and as they would not tell that they paid leave any traces. rebates, I would be glad to know how I In the case of government railroads could obtain evidence that they did. inspection and publicity can be made
“Having gotten through, Senator, with effective because the roads are not in the the lines between Chicago and New York, hands of men whose economic interests we said perhaps this is not a fair example. and business ethics command secrecy, Now, we will go up in the Northwest, and but in the hands of public managers who we will take the lines that carry flour would be traitors to the business ethics from Minneapolis east. We instituted of their position as well as to the law, if another investigation, and we put the they tried to defeat or evade inspection railroad and the traffic men and the mill- and publicity. This is one of the great ers on the stand, and they all swore with- advantages of public-ownership. Everyout exception that the rates were abso- where in Germany, Denmark, Belgium, lutely maintained. . . . We could not Austria-Hungary, etc., I found the govget the admission from any man there ernment railroads absolutely free from that they had ever paid a rebate. We unjust discriminations. The same is said: “This does for the East; now let us true of the government roads in the Anglogo West.' So we went to the Pacific Saxon colonies of Australasia and South coast, to Portland, Oregon, and went Africa. The reasons are that the main over exactly the same performance there. motives to discrimination are eliminated, We made one man admit that he burned that much fuller publicity is possible, up his books rather than present them to and that the railway managers are emthe Commission, but we could obtain no ployed by an authority that is opposed admission of the payment of any rebate to discrimination and will discharge them there.
if they are found to be breaking the law, “There has not been a time since I instead of being engaged by an employer have been an Interstate Commerce Com- who asks only for profit and will approve missioner when if the traffic officers of and promote the manager if he wins that the trunk lines between Chicago and the whether through discrimination and Atlantic seaboard would have consented breach of the law or not.
"They could n't do it.”
"Why not? Human nature is the same in South Africa as in America. Suppose they made some traffic man a partner in their profits or brought pressure enough on him in some way to get
"It would n't be possible." "Well, why? Suppose it were possible, what would happen?"
"The government auditors would find it out, and the manager would lose his position."
"Could n't he cover up the thing?" "Not for any length of time.” "The people would have a fit if any thing like that were attempted,” said a member of the manager's staff.
"You have no attempts to secure preference then?"
"No, it is not even attempted."
The favorite remedy with our railway managers is the legalization of pooling. They say discrimination is the result of competition among the railways for business and that if the railways are allowed to make traffic agreements discrimination can be stopped. But we have seen that competition between railways is only one of the six principal causes of discrimination. Pooling would not touch any of the other five causes. To the president of one of the greatest railroad systems in the country, who told me, as so many others have done, that the legalization of pooling is the remedy for discrimination, I said: “Are there not two great classes of discrimination? (1) Those
that are due to railway competition, and (2) those that are due to the interest of railway managers or their desire to favor influential persons, relatives, business associates or others who have a 'pull ? ' And while the legalization of pooling might tend to diminish discriminations that result from railway competition it could not prevent discriminations caused by interest or 'pull"." The railroad president said he thought that was true and he admitted also that even competitive discrimination could not be entirely eliminated by pooling. In fact, in earlier years before the Interstate Commerce Act was passed, when traffic agreements were in vogue, it continually happened that some greedy road would cut below the rates agreed upon in order to get a large share of traffic and enlarge its claim upon the pool. Railroad presidents and managers have been known to go direct from the meeting at which the pool was organized, hunt up some big shipper and give him a cut rate at once in order to capture more than their share of his busi
The fact is that none of the proposed remedies are likely to be effective. We have been assured from time to time that the remedy has been found and that rebates and discriminations have ceased. When the Interstate Commerce Act was passed, 1887, railway men declared that rebates have been stopped." And for a time direct cash rebates were prevented to a considerable extent; but other forms of discrimination were in full swing all the time and rebates soon came back in full force. Years after the Interstate Commerce Act went into effect a famous railroad president declared "that if all who had offended against the law were convicted there would not be jails enough in the United States to hold them."
After the Elkins law was passed, in 1903, railway men again affirmed that railway rebates and discriminations had been stopped. And last year before the Interstate Commerce Committee of the Senate, presidents and managers testified
by the score that rebates and discrimina- root from which railway abuses grow, tions were no longer in use. But James namely, the antagonism of interest beJ. Hill, president of the Great Northern, tween the owners and the public. So and Victor Morawetz, Chairman of the long as the railways are owned by a few Executive Committee of the Santa Fé, and operated for the private profit of a and members of the Interstate Commerce few there will be unjust discrimination; Commission, and other high authorities, men who own coal-mines, steel-mills, testified that rebates and discriminations packing-houses, oil-refineries, etc., and had not ceased. And President Hill de- also control railroads will not give their clared that they never would cease. competitors in business equal rights with
In the railroad investigation in Wis- themselves over the railway lines whose consin recently instituted by Governor policy they determine. So long as the LaFollette it was found that every rail- railway managers are employed by and road of importance in the state has been are the servants of a small body of stockpaying rebates every year both on freight holders, especially men who own the and passenger business, state and inter- great trusts, favoritism is bound to constate traffic, the total rebates for the prin- tinue. The only way to secure managecipal lines amounting to more than $7,- ment of the railways in the public interest 000,000 in six years, and it was further is to make the railways public property discovered that the total rebates paid in and the railway managers servants of the the year following the enactment of the public. You cannot expect the servants Elkins law were greater than the rebates of the other fellow to manage the business for the year before. In some cases the owned by the other fellow in your
interest. payments after the law took effect were If you want to have it managed in your very much greater than before. The interest you must own it and make the Northwestern Railroad, for example, managers your servants. jumped from $212,075 rebates in 1902 Before a club of business men in one to $410,476 in 1903 mostly after the Elkins of our leading cities recently, a member law went into effect (February 19, 1903). of the Interstate Commerce Commission
Professor Hugo Myer, of Chicago Uni- spoke in favor of the President's railroad versity, asserts that the prosperity of policy. Mr. Edgar Rich, successor to America is founded on railway discrimi- Richard Olney as General Counsel for the nation and that the trouble with the gov- Boston and Maine Railroad, presented ernment railways of Germany and other the case for the railways; and I followed countries is that they have abolished dis- with a talk in the course of which I stated criminations. Few, I believe, will agree the conclusions just set forth. As we with Professor Myer that railway favor- were leaving the hall the Commissioner itism is the foundation of prosperity in said: “Rich, you and I are both wrong, general, although there is no question and Parsons is right. I want to see the that it is the foundation of the prosperity other method tried, but it won't succeed. of the Oil-Trust, Beef-Combine, and I know it won't succeed.” many other giant combinations of capital. Let us do our best to apply effective
Our people as a rule, including many regulation. Let us adopt all the Presiof our railway managers. would be very dent's suggestions, and more.
Let us glad to discover an effective method of have thorough public inspection and the preventing railway discrimination be- utmost possible publicity. Let us detween persons and places. My studies mand representation of the public upon at home and abroad lead me to believe every board of railway direction, and if that there is only one method by which necessary in every railway traffic office. this can be accomplished, and that is to But let us not suppose that we can do remove the fundamental cause or tap- more than palliate railway abuses by any
stem of regulation. So long as you: We know that powerful railroad inter-
FRANK PARSONS. soon as it was worth owning.”
AN OPEN LETTER TO THE SECRETARY OF THE
ON. LESLIE M. SHAW, Secre- can war, Miss Helen Gould offered as a tary, Washington, D. C.:
donation quite a large sum to our governDEAR SIR-I beg leave to submit a few ment. It was returned, presumably on -evident propositions, and a few sug- the ground that the nation had no law tions in connection therewith, asking authorizing the acceptance of such donair pardon in advance for any boldness tions. bay be guilty of in so doing.
The donations made in recent years 1. Those that control the money of a for public and civic purposes, by such ion, control that nation and all the gentlemen as Carnegie, Rockefeller, Ariness there is in it.
mour and many others, are fresh in our . Give one person the money the minds. rld is paying as interest each year for Some two years ago, the New York enty-five years (an average of four per Times gave an accurate statement of the it. per annum), and he will own sub- donations of this kind that had been made ntially all the money there is in the in the United States in the few years prerld at the end of that time.
ceding, showing the following astonish3. If the money of a nation is its life- ing results: In 1898, $38,000,000; in pod, it is evident that it should be under 1899, $62,500,000; in 1900, $47,500,000. - control of its people, and not congested It is safe to say that each year since has a few. Such in substance was Presi- outstripped any former year. nt Jackson's objection to the old United Fifty years ago millionaires were alates Bank.
most unknown; to-day we number them At the beginning of the Spanish-Ameri- by thousands. Those of us in middle
age can well remember when the man by will or otherwise, of money (or propworth $10,000 was far more uncommon erty to be converted into money), for the than the man of $100,000 to-day.
purpose of establishing banks. The The natural impulse of the great ma- donor could give the fund for the use of jority of our wealthy men in this country any state designated by him, or, in case is to do as much good as they can. They it was given without such designation, are patriotic, and would be pleased to then such funds to be assigned by Your assist the nation and the people that have Excellency among the different states made it possible for them to accumulate as nearly as practicable pro rata per capita. the immense fortunes they control. They Second–The fund could be donated are not profligates; neither do they wish absolutely, or with the right on the part to encourage profligacy in their descend- of the donor, or his heirs, to receive back ants. They may live well, and may wish from the government one cent on the that their children may live well after dollar (no interest) each year for one they are gone, but they know that nothing hundred years. can so completely break down and ruin Third-All states to receive such funds the moral character of their children as under laws requiring that they should profligacy.
forever keep such funds intact, by direct Many a wealthy man doubtless feels taxation if necessary, thus making good that it matters not how much wealth he any loss that might occur through the may leave his children at his death; that wrongful act of any officers of the bank it will be hard to conjecture how much or otherwise. of it they will have left in a few short Fourth—The state should be allowed years, or how much lasting injury they to nominate the bank officers, subject to may do to his memory, or their own name, the approval of the national government, in the spending of it.
and the latter should always retain power At best, and should he leave it under of visitation and inspection into the afthe wisest control, it must pay from two fairs of such banks, and the power also to five per cent. per annum in taxes, as of suspending, or ousting, all officers. well as run the chance of loss in invest- The salaries of all officers and employés ment. It may accumulate, but the gen- should be fixed under general rules, proeral rule is to the contrary. In a given mulgated by your department, taking territory, there may be a thousand men like or similar services of those in your whose learning and intelligence fit them department, and the compensation paid, for positions in the highest councils of as your guide. the nation, and still but very few, if any, Fifth-The money so donated should among them, could take an inheritance be exempt from all taxes, levies or assessof a couple of million dollars, and have ments of any kind, be the same state or that amount at the end of a life-time. national. It should be exempt from
Let us see if a feasible plan may not be attachment, execution, creditor's bill or adopted, by which the very wealthy may otherwise, as against the donor, his heirs, donate to the public, for the best possible or persons described in the will or deed and most worthy object, a part, or all of of donation. They might also be protheir fortune, and still get every dollar hibited from selling, assigning or encumback thus given away.
bering their right to such fund, if the will, Suppose that you should recommend, or articles of donation, should so declare. and Congress should enact, a law with Sixth-General banking, or commerthe following among other provisions: cial banking, should be avoided, and the
First-The national government should funds of such banks should be invested be and act as trustee to receive donations, only in national, state, county, city or